Retailers expanding globally turn to developing markets

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Retailers plagued by slow sales might want to seek customers outside the U.S. -- places, for instance, such as Brazil, Chile and Uruguay.

Those countries top a 2013 ranking of developing countries for retail investment by consultant A.T. Kearney.


"South America is blossoming," the report says, thanks to increased consumer confidence amid a strong and growing middle class, controlled inflation, sustained economic growth and continued economic and political stability.

Louis Vuitton, Cartier, Yves Saint Laurent, Emporio Armani and Calvin Klein opened or have plans to open stores in Uruguay. Gap opened its first store in Uruguay in December, the report says.


The global retail development index, published each year since 2002, ranks the top 30 developing countries based on 25 macroeconomic and retail-specific variables. The study found that while developed markets have weak or stagnant growth potential, opportunities lie in developing markets.

Turkey, the sixth-ranked country, is luring international retailers with a growing economy and favorable consumer demographics. Apple is opening its first store in Istanbul this year.

In Mexico, which rose by seven rankings to land at 21st, Payless ShoeSource will open 41 stores though a Mexican franchiser in the next three years. Apparel chain H&M has opened its first Mexico City store.

And sub-Saharan Africa continues to build momentum, with Botswana and Namibia in the rankings.

Because five of the 12 most populous countries will be in Africa by 2100, "there is no doubt that this continent is a dramatic retail opportunity for those that can navigate the business and political risks," the report says.

For luxury retailers, some up-and-coming hubs are on the horizon. Small-population countries with wealth and a focus on consumers were ranked highly, among them Uruguay; ranked third, Mongolia, seventh; Georgia, eighth, and Armenia, 10th.

The index also found examples of global retailers reversing course after aggressive expansions, including in China, where "many are scaling back plans for new stores and choosing sites more carefully," the report says.

Meanwhile, in Latin America and Central Asia, more retailers are opening in smaller countries before deciding whether to enter larger markets.